Although the office market has not yet experienced the full impact of the pandemic, it is evident that workplaces will need to be reimagined and designed more carefully, with safety and well-being in mind. To find out more about how offices are adjusting to the new reality brought about by the coronavirus outbreak, Commercial Property Executive talked to Daniel de la Vega, the chief executive officer of Miami-based ONE Commercial Real Estate and the president of ONE Sotheby’s International Realty. De la Vega provides insights on South Florida’s office landscape and sheds light on the post-COVID-19 world.
How has the coronavirus outbreak altered South Florida’s office landscape?
De la Vega: At the onset of the pandemic, the common and easy statement to make was that the office sector was going to disappear. However, fast forward two months and those same comments have changed to: “When can I get back to my office?” and “I can’t work out of my home anymore.” At this point, we are seeing everyone become more appreciative of designated work environments and the workplace in general. People are seeking out creative and flexible office spaces to achieve the proper work-life balance.
How has the pandemic changed the focus of office design?
De la Vega: The immediate impact of the pandemic is a new focus on how we will use our offices, and how our offices will be designed and prepared if we ever go through a crisis like this again. Now more than ever, it is so important to have offices that are designed and built with tenants’ safety and well-being in mind.
How has the pandemic impacted your operations across South Florida?
De la Vega: Fortunately, we were already very equipped and prepared to work remotely, so in terms of our operations, it was more about implementing the tools we already had and using them to the maximum capacity. Our transition was smooth and efficient. As a company, this is where we stood out, and we received gratitude from our clients after they saw how quickly we could pivot and adapt to the environment to continue business as usual.
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What can you tell us about investor sentiment in the region?
De la Vega: Though no one can truly anticipate every risk, investors have now learned and are more aware of another type of risk—such as a pandemic—they must account for when they make their investing decisions. In the past, they may not have thought to consider a pandemic and its economic repercussions. Going forward, I believe they will make their decisions on what type of products are better equipped and designed to be as pandemic-proof, or as least-impacted, as possible.
How is South Florida’s office sector weathering the COVID-19 storm compared to other asset types?
Throughout this pandemic, the retail sector has been hit the hardest. With the closures, government mandates and shelter-in-place orders, it was inevitable this segment would take a significant hit. The office market, alongside multifamily, has experienced some of the highest collection rates in the country. People are still operating and tied to leases, and it’s equally important to pay your office space as it is to pay your home mortgage.
Though these are unprecedented times, the need for office space is still very apparent and strong. Our clients have shifted their focus to having the right type of office space in the future, and that’s why the design and build of this type of product are so important.
An example of a product that is inherently built for the future office market is one located in downtown Miami called Creative HQ. It’s located within the Natiivo Miami building and comprises 130,000 square feet of creative office condo space. The project will have spaces as small as 490 square feet for satellite offices for today’s corporate office use, and owners and tenants will have access to three levels of 70,000 square feet of amenities called Natiivo Social. Natiivo Social will offer a health and fitness center, outdoor terrace and yoga area, specialty restaurant and cocktail bar, speak-easy, pool, spa and business centers.
South Florida has been a magnet for businesses relocating from the Northeast. Will this trend continue after the health crisis?
De la Vega: This desire, and trend, has increased based on the fact that some of these companies already had South Florida on their radar due to the beautiful weather, city infrastructure, tax implications and, now, low-density population. We have seen much more activity, as companies accelerate their relocation process and are finally making the move to South Florida. We are well-positioned for the uptick in these relocations.
What are your predictions for South Florida’s post-pandemic office landscape?
De la Vega: As mentioned before, South Florida has everything these companies are looking for —with Creative HQ designed and built specifically for the new era of office usage, we are ready for the future of the office landscape in South Florida. The need for flexible office space, especially with walkability in the neighborhood and connectivity to nearby transportation, will be very important and influential in the market.